Far too many people don’t save much or any of their money, which leaves them completely unprepared in the event of an unexpected bill. Maybe your car breaks down and you need to spend $1,000 or more getting it repaired. Or perhaps your refrigerator fails and you end up needing a replacement. There are all kinds of costs that can strike without any warning. That’s why you need an emergency fund.

There are several potential consequences of not having an emergency fund. If you can’t pay certain bills, you could get charged late fees that make a bad situation even worse. It will also negatively impact your credit score. You may go into debt to pay what you owe, at which point you’re paying interest charges every month until the debt is paid off. With an emergency fund, you can avoid that situation, as you’ll have the money available to pay for pressing expenses.

How Much Should You Save?

So, you know that you need an emergency fund. But how big does that emergency fund need to be? The most common recommendation is about three to six months of living expenses. This is the typical amount of time it takes for a person to find a new job, so with an emergency fund of this size, they’ll be able to survive over that time period without going into debt.

If you’re a small business owner, then your income is likely more volatile than it would be if you had a job with a salary. You should still have at least three months’ worth of living expenses, but it’s better to save enough money to cover yourself for a year. You should also save a similar amount for your business. This business emergency fund can keep your business afloat during down periods, and you can tap into it if new opportunities open up and you need additional funds.

Starting Your Emergency Fund

When you don’t have much saved, saving enough to last you for 12 months sounds like a daunting task. That’s why you should start with a small amount that you can handle. Create a budget so you know how much money you make every month and how much you spend. Then, commit to putting a certain amount into your emergency fund, and make that your first payment every month. You may even want to set this up automatically so you don’t forget it. It will take time, but when you do this consistently, you’ll make steady progress and eventually have plenty of cash available if you need it.

As far as where you should deposit this money, a savings account with your bank is fine, or a short-term certificate of deposit (CD) is also an option. There are two things to keep in mind: you need to be able to access the money at any time and you don’t want to risk anything. Don’t get your money tied up in an account where you can’t pull it at a moment’s notice if you need it, and avoid investing it, even if it’s a supposedly “low-risk” venture. This isn’t an investment, and you don’t want to lose a chunk of your emergency fund because you treated it like one.

Loans for Your Small Business

If one of those business opportunities is available, but you don’t have the money to pursue it, there is another option – a Certified Business Loan. This type of loan doesn’t require you to have good credit, as approval for the loan and the terms of the loan depend on your business’s financial history, not yours.

You pay a Certified Business Loan back in installments over a long period of time, so you’re only adding a small monthly payment to your expenses. Payments are deducted directly from your business bank account, so you don’t need to remember to pay anything. You can use your loan for anything your business needs, whether you’re expanding into a new area, purchasing an important piece of equipment, or you need a loan for another type of expense.